Living life just a little bit differently
Many people are inundated with debt through their mortgage, lines of credit, or personal and credit card debts. Most people also live paycheck to paycheck, with minimal savings or investments, and have no idea how to get off the tread mill. It’s no wonder most people feel “there is no money left at the end of the month.”
With the Christmas holidays coming up, it’s even more important not to be lured into piling on more debt.
Mortgage payment and housing costs such as rent and utilities are fixed expenses. These can easily account for half of a family’s net income or more. There is no getting around that one, and most urban centers, rent and housing costs are not cheap. Add on food and other costs for your family, and that’s another big chunk off of anyone’s income. If you live far away from work you will need a car to commute or face 3 to 5 hours of commuting per day, and that’s also a huge chunk of income down the drain. Start adding all these expenses up and there isn’t much room left for anything else. It’s no wonder many live beyond their means and use debt to make the difference.
With Christmas shopping and holiday advertising in full swing, many feel obligated to buy gifts, entertain, or even take a holiday they can ill afford. Christmas is also another big drain on people’s resources, and many again use debt to make the difference. Come January that leads to a credit hangover and credit card bills for many.
Most people do make an honest effort to eliminate their consumer debts at some point, making a committed budget to pay $200 or $300 per month or more on their credit cards. Many even get consolidation loans with the best of intentions. The main problem is people continue to use their credit cards so the balance never gets paid off. The high interest rates keep compounding, and people continue to get behind. Many people also don’t have a secured line of credit, to reduce their interest payments.
Your first goal should be to eliminate all of your credit card and consumer debt. That means:
Paying down you consumer debts should be your first priority. It may even take you two to three years to get ahead, but it will be well worth it. You will have paid down your debts and have a big weight taken off your shoulders. The hard work invested to pay down your debts will give you a sense of accomplishment and make you more cautious towards using debt in the future.
Once you have your consumer debt paid down, investing for your future will make a lot more sense. So this Christmas Season, don’t be lured into piling on more debt!
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I have already listed down what to buy for our Christmas dinner and for my Christmas gifts. I tried to set a budget for that and to pay cash for all my purchases.
Smart thinking, you are well ahead of many this time of year!
I recently saw a study that claimed more than half of Canadians say they’re no better off financially than they were a year ago We also have record debt to income levels right now so I can understand why many feel that way. Only 28% of those surveyed said their finances had improved. Getting debt under control can be hard, but it has to be done because debt can easily snowball out of control. If people do use credit cards to buy gifts this holiday season, hopefully they understand the importance of paying off the balance before interest accrues
That is a tough one but with a little creativity, Christmas doesn’t have to be expensive.
You can make gifts and shop smart for the food. Then plan it in advance the next year so you have the money before the event.
This is a tough month for most families. The trick is to stick to a budget and not go overboard. Yep, don’t buy cars wrapped in bow-ties!
Although I don’t have debt, I know how easy it is to get caught up in spending this month. I don’t even have a lot to buy for people and this was already one of my most expensive months. I think come January lots of people are going to have financial hangovers.
Unfortunately, I agree with that – many will have financial hangovers in January.
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